The turnout at the field hearings was high. Although held during
the workday, over 100 people of all ages and backgrounds attended
each hearing to listen or participate. (A list of speakers and their
affiliations is attached.) The speakers included ordinary taxpayers,
accountants, enrolled agents, current and former IRS employees, and
tax return preparers. Although focusing on different issues, most
expressed unhappiness with either the current tax system or the way
it is being administered. Many of the same concerns were raised at
all of the field hearings.

Tax complexity. There was virtually unanimous agreement
that the tax code is too complex and needs to be simplified. There
was broad agreement that many of the things that the IRS is blamed
for can be laid at the feet of Congress. Not a great deal of thought
is given to the administration of provisions that are being
considered by Congress or its interplay with other provisions of the
tax code. The assumption is that once a provision is enacted, it can
be made to work by the IRS, and that any failings in this area are
the fault or problem of the IRS.

Administration of the tax system. There was widespread
sentiment that the quality of interactions with the IRS has
deteriorated. Although many blame the recent IRS budget cuts, it is
unclear that funding is the sole answer.

Notices

Many taxpayers and practitioners complained that notices are
either indecipherable or not very helpful in explaining the issue
being raised.

Taxpayer response

The mechanism for taxpayers to respond to IRS notices is not
working. Many taxpayers have difficulty contacting the IRS—either by
telephone or through face to face contacts. When contact occurs, the
results are often unsatisfactory. Many times the IRS cannot
adequately explain the problem. This is a result of an inability to
access relevant data through IRS computers or a lack of understanding
of the issue. Often, it is difficult to reach the right IRS person.
Depending on the nature of the action, the taxpayer must either deal
with a service center, a district office, or some other location.
There is no centralized or one-stop service point.

When taxpayers are required to make multiple contacts, the process
often starts all over again. It is nearly impossible to reach the
same IRS person twice. Often, the second person is unaware of the
problem raised and has no indication what action, if any, has been
taken to deal with the problem. This is very frustrating for
taxpayers. Often, practitioners advise that if small dollar amounts
are at stake, the taxpayer should just pay the money demanded even if
the IRS is wrong. This does not encourage respect for the IRS or the
tax system.

IRS response

Even when the taxpayer responds timely to an IRS notice—through a
letter or a telephone contact—there is no certainty that the IRS is
aware of the contact. Often, a second notice or other action is taken
by the IRS independent of the taxpayer action. Unlike the private
sector and other government agencies, there is no one caseworker
assigned to most IRS notices. When names and telephone numbers of IRS
personnel are given, the person often cannot be reached. This further
frustrates and angers taxpayers.

Many taxpayers resent the serious penalties for failing to respond
to an IRS notice promptly and correctly while the IRS often takes its
time in responding to taxpayers. Usually, there is no certainty that
the IRS has received and acted on a taxpayer communication.

Taxpayer service. Taxpayers testified that the quality of
service being provided by the IRS has been decreasing noticeably over
the past few years. As discussed above, taxpayers using the telephone
often have trouble getting through. The number of IRS offices and the
available hours are decreasing. As part of its plan to reorganize
operations, the IRS has been closing or reducing the functions of
many local offices. In places like Omaha and Des Moines this means
either no access or a long drive to the nearest IRS office.

A taxpayer who needs an IRS form or publication often has to
resort to the IRS toll-free number to order such items. Even if a
taxpayer gets through, the response time is slow. A number of
practitioners and taxpayers complain that it takes four to six weeks
to get the forms.

Training and quality. There is almost universal agreement
that the IRS has cut back significantly on training. This has
continued to increase the knowledge gap between practitioners and IRS
employees. In addition to providing incomplete or incorrect
information to taxpayers, many practitioners resent having to provide
training to an auditor who is examining their client’s return. It is
also unclear that the IRS is providing its examiners with the tools
needed to research tax questions and keep up with changes.

IRS personnel. Although many witnesses complemented IRS
personnel on doing a difficult job, a significant number were
concerned that the IRS does not properly oversee its personnel. Some
witnesses testified that they had encountered rude, abusive, or
unhelpful IRS personnel, but had no sense that management was willing
to do anything about it. Some IRS employees noted that supervisors
are unwilling to take corrective action because of the difficulty of
firing poor performers. Overall, taxpayers believe there is no
striving for excellence. Trust and respect of the IRS is decreasing.
Although many view the IRS as doing a difficult job, a number of
individuals were concerned that the IRS retaliates against those who
criticize it.

Electronic filing. Although the IRS is encouraging
practitioners to file electronically, it has not done enough to
increase its appeal. The two most common complaints include the need
to file paper signature documents (Form 8453), and that some forms
cannot be filed electronically—such as the AMT and fuels credit tax
forms.

Earned income tax credit. From an administration
standpoint, everybody who mentioned the earned income tax credit
(EITC) raised concerns, including: 1) it is a social welfare program
that the IRS is not equipped to administer; 2) the large number of
persons with questionable eligibility applying for it; 3) the
frustration of practitioners that certain individuals are improperly
taking it; 4) the difficulty in applying it; and 5) resentment that
practitioners are being asked to police the credit. The Commission
did not hear from any recipients of EITC, however.

Cycle time. The time it takes to interact with the IRS to
resolve a problem is taking longer and longer, according to
practitioners. Some of this is due to the reorganization and some to
the slowness of the IRS. The bottom line is that it costs more to
deal with the IRS. Although the IRS speaks of doing a quality job,
there is no sense that this is taken seriously.

IRS management. Although the IRS describes itself as a
financial services organization, the feedback from the hearing
indicates the IRS does not have much appreciation for modern business
management practices, customer service, or financial services. One
former executive noted that the IRS sometimes takes actions to solve
a problem before it has the facts on what the problem actually is and
what the solution should be. Moreover, some IRS employees believe
that their input is routinely ignored by Washington. Seeking input is
a formality. Practitioners also fault the IRS for ignoring their
input.